Accused monopoly Varsity Spirit Spars with former employees – Sportico.com
Varsity Spirit, the billion-dollar, Bain Capital-owned cheerleader company that fights a trio of federal antitrust lawsuits, is now facing a growing group of former employees trying to carve out their own corner of competitive joy. “All Star” market.
New ventures started by high-ranking former Varsity insiders present additional challenges for the joy giant, which has recently shown vulnerability after decades of largely undisputed leadership.
Since last year, Varsity has filed a complaint against three ex-executives: National Sales Director Kevin Brubaker; vice president of operations Abel Rosa; and Oklahoma State Director Josh Quintero, accusing them of violating non-compete covenants.
Following their ouster, Brubaker and Rosa announced the formation of Legacy Tours last fall, a company that planned to host a series of cheerleading and dance competitions across the country this year. Quintero resigned from Varsity in December to take on the role of communications director for the Open Championship Series, a cheerleading cooperative of more than 70 international event producers. In court records, Varsity said Legacy Tours and OCS represent direct competition for his business.
Rosa’s case is scheduled for trial in January, and there is a programming conference Friday in the Brubaker case. After the Varsity lawsuit was filed, Rosa told a court that she stopped working for Legacy Tours and the company subsequently canceled all of its incentive events for 2021.
Brubaker, meanwhile, claimed that Varsity “fraudulently tricked him” into signing a six-month layoff agreement last spring, under the false impression that he was free to work in the industry after the expiration of its mandate.
In defending his leap to the OCS, Quintero cited antitrust claims made by other parties against Varsity, arguing that the breach of contract litigation is âconsistent with the practice of Varsityâ¦ events.â The Quintero case should be judged at the end of next year.
Rosa, Brubaker and Quintero did not respond to requests for comment. Although Varsity has sued them separately, each of the defendants is represented by the same Tennessee-based attorney Will Carver, who also declined to comment.
Last week, two other former key Varsity employees, Managing Director Brian Elza and National Sales Director Jim Hill, announced they would be launching sister cheerleading competition companies, Liberty Spirit and Freedom Spirit.
In corresponding press releases revealing their associated brands, Hill and Elza, whose jobs at Varsity ended last summer, said they would compete in the Open Championship Series. They have also made it clear that they will not be joining the United States All-Star Federation (USASF), a national governing body founded by Varsity and embroiled in a controversy over its handling of cases of sexual misconduct by cheerleader coaches. Elza was previously a member of the USASF board of directors, while Hill served on several of its committees.
“I hope that with all that has happened recently, the USASF will take the appropriate steps to ensure that their organization benefits all member companies and all athletes,” Elza said in the statement. âIf and when that happens, we will reconsider our decision. “
The USASF did not respond to a request for comment.
In an interview with SporticoElza says he assumes that the USASF would welcome her company’s participation in the future, if she later applied for admission. âI was a member of the board for seven years,â he said. âThere are still people on the board who are my friends. “
Hill, meanwhile, says the cheerleader world has long called for “unauthorized” events outside of the USASF’s imprimatur, and that he hopes to exploit that desire.
The duo lost their top selling positions at Varsity Spirit amid the pandemic-fueled corporate restructuring, which has seen a number of former departures since Bain’s 2018 acquisition of its parent company, Varsity. Brands.
âIt was a shock,â Elza said. “There was no part of me that thought I was going to lose my job.”
Yet Elza and Hill chose to wait until their negotiated non-compete clauses were concluded before launching their new businesses. Elza says that just before his Liberty Spirit announcement, he reached out to Varsity for a final go-ahead.
Varsity did not respond to a request for comment sent to a spokesperson.
Hill says he and Elza plan to initially pursue the cheerleading event market in the Northeast and Mid Atlantic.
âWe’re competing for the same people,â said Hill, âbut it’s hard to say you’re ‘competing’ with Varsity, based on their size. I’m not looking to go out and take over the world. I am looking to provide quality options for people who are looking for these options at a lower price.
David Owens, director of events for the Open Championship Series, says he welcomes former University officials with open arms.
âWe are pro-competition,â Owens said. “We are not afraid of people coming to the market.”
In addition to his role in the OCS, Owens is the owner of the Oklahoma City Rockstar Championships, a co-plaintiff in one of the class actions against Varsity, brought by the companies American Spirit and Cheer Essentials.
The lawsuit not only accused Varsity of illegal anti-competitive behavior, but also of RICO violations. In August, the federal judge overseeing the three antitrust lawsuits dismissed Varsity’s petition to dismiss a case brought by a group of gyms and parents, who had purchased varsity products or paid a varsity contest entry fee. The USASF is a co-defendant in this lawsuit.
Elza confirmed that he was subpoenaed last week by the plaintiffs’ attorneys to appear for a deposition, something in which he admitted he was “not really keen on to participate”.
As the court cases progress, the immediate threat these new cheerleader companies pose to Varsity’s bottom line appears to be minor. After years in which Varsity was seen as a steamroller or systematically engulfing competitors, some observers see the pendulum swinging towards decentralization.
âI almost see this as cyclical,â said Sheila Noone, longtime communications director for Varsity, who was also laid off last spring. âThinking back to the early days of all-star cheerleading in the late 90s and early 2000s, there were so many event companies going out and fighting each other for business. “
The response to the Liberty Spirit announcement “blew me away,” Elza said. âPeople are eager to change. They haven’t had a change for a long time.
Owens said it was “too early to tell” if these new entities could seriously challenge Varsity’s dominance. This summer, Owens spoke to the Federal Trade Commission at a public meeting, telling regulators that Varsity’s influence over the USASF and another national governing body, USA Cheer, posed “an immediate threat to the children’s health, welfare and safety and sport. “
In December, a United States today The investigation revealed “an inherently flawed process” in the USASF’s oversight role, which allowed dozens of cheerleading coaches who had been accused of sexual or psychological abuse to continue to coach. young athletes.
Last month, Varsity founder Jeff Webb, himself a co-defendant in one of the antitrust lawsuits, said Sportico that much of the antipathy towards the company arose out of jealousy of the industry. Webb resigned from Varsity in December, saying he was leaving to focus on his work as president of the International Cheer Union and pursue political endeavors.
Webb and Varsity have denied that the company has ever operated as a monopoly.
A number of former Varsity officials, in addition to Elza, could serve as key witnesses in the antitrust litigation, in the event of a lawsuit. Brubaker, for example, is specifically referenced in the American Spirit complaint as an example of “the growth and entrenchment of the monopoly business of Varsity.”
Prior to joining Varsity, Brubaker founded Atlanta Cheersport, which oversaw one of the nation’s largest cheerleading events. Varsity took control of Cheersport in 2012 and its 30 annual cheerleading and dance competitions. As part of the acquisition, Brubaker became an executive of Varsity, eventually joining the management team. (He did not respond to requests for comment.)
Varsity says that as part of his job, Brubaker agreed to a three-year non-compete agreement in the event of departure. In April, Brubaker signed a separation agreement with Varsity that paid him $ 72,000, according to the company’s complaint. The lawsuit, like Rosa’s, was filed in Tennessee State Chancellery Court in Memphis, where Varsity’s headquarters are located.
Six months later, Brubaker and Rosa, along with six other former Varsity employees, formed two LLCs under the trade name “The Legacy Connection”. Varsity alleges that Brubaker began sending email solicitations to “many cheerleader coaches, gym owners and others” inviting them to participate in a series of Legacy cheerleader and dance competitions. Tours planned to organize across the country.
Varsity then sued and sought injunctions against Brubaker and Rosa, and earlier this year the parties agreed to a temporary injunction, which remains in effect. Rosa admitted that she was unaware of the covenants in a Bain Capital stock option plan offered to Varsity employees when Bain acquired the company. However, Rosa maintains that he never exercised the option and therefore should not be subject to his two-year non-compete clause.
Owens considers the Varsity employment litigation only “delaying the inevitable.”
He added: “I basically consider them to be bullies with a big stick, and they have a lot of money.”